Gold price is under pressure as traders digest the strong US GDP numbers released yesterday. The strong data has further confirmed that the fed is likely to stay on the path of interest rate hike for the rest of the year. However, considering gold is on a decline in terms of price the yellow metal has been able to grip and float above the $1,200 mark which is a strong support level for the precious metal.
The US GDP data which had been released on the 29th of August quarter enabled investors to have a strong mindset that the feds interest rate hikes will take place and in turn this will drive the gold price lower. Increasing probabilities of higher rates weaken the non-interest yielding gold. Moreover, this leads to investors constantly moving towards the dollar.
The consequences to the rate hikes are heavily injuring for gold as the yellow metal is on its way to the fifth straight monthly fall. As the days pass and we come closer to the next rate hike, gold is likely to fall. Yes, we may see slight increases. However, overall it is expected to see an increase in lows. The fifth straight monthly fall will result to golds longest streak in terms of a decline dating back to early 2013.
The precious metal at present for this year is approximately at a 7.4 percent decline, while the dollar increases to be a safe-haven for more investors.
Oil prices continue to rise as sanctions on Iran’s oil continue to affect supply. The price for oil has experienced strong gains while U.S. continue to prepare sanctions on Tehran. The demand for gasoline reaching record highs rises while the supply decreases, this alone is benefiting oil prices continuously.
Oil supply is a concern for the industry. However, investors are being mindful that The Organization of the Petroleum Exporting Countries will be discussing its plans to substitute its loss in supply in September because of the planned sanctions on Iran. Therefore, as of now we are seeing an increase in price consistently in the markets.
However, it must be kept in mind that oil supply may have a backup plan to cover losses from the decline in supply. On the other hand, the oil industry goes beyond The Organisation of the Petroleum Exporting Countries where there are various other countries that supply oil which could be utilised to compensate for the loss the markets are currently facing. Additionally, as of now the bullish sentiment in the markets does remain. However, investors will be mindful of the upcoming discussion about oil supply.
Furthermore, it is highly likely that Iran’s oil supply will drop to around 2million bpd (barrels per day) which would be a major drop considering the production levels were at 3.1 million bpd in April this year. Therefore, the comparison between these figures alone emphasis the hit the oil industry is taking which at the same time drives the oil price higher which is currently priced at 477.32 per barrel for Brent crude oil.